Employee Referral Schemes
Companies’ staff members are increasingly being given a crucial role in the hiring of new employees, as employers respond to recruiting difficulties.
Employee referral schemes, as they are called, are popular in the US (where they are among the most preferred recruiting methods) and are increasingly being used in the UK – especially in the City, where competition for talent is fierce and the most gifted people are at a premium.
According to the Chartered Institute of Personnel and Development, 38% of British employers in 2004 used employee
Major firms that run staff involvement schemes include Amazon, Nationwide, Sainsbury’s, Vodafone, Bupa and Asda Wal-Mart, the retail giant that fills 40,000 positions every year.
Members of staff are encouraged to suggest candidates to their employers, with rewards such as cash, holidays and cars for those whose recommendations result in a person being recruited (and successfully serving a probationary period – usually three months). The higher up the corporate ladder the new recruit is placed, the greater the reward.
The schemes have repeatedly proven not only be successful but also cost-effective. (Research carried out in the United States claims that 80% of companies believe employee referrals are the best-value method of sourcing new workers).
There are several advantages to employee referral, the first being that new recruits are likely to settle in at the company quickly and stay for longer because they have an instant circle of acquaintances through the friend that suggested him or her.
This association with a member of staff also means the new employee may already have some understanding of how the business operates, and he or she will be motivated to not put in a poor performance that will reflect badly on the friend that made the recommendation.
Employee referral schemes are simple to establish, cheap to run, and can be easily publicised through a firm’s
However, there are concerns that staff involvement schemes can stifle fresh ideas and limit the influx of new blood to a business because existing employees tend to suggest candidates in their own image.
This situation has also led to worries that a need for fairness and diversity may not be satisfied, with a largely young, white workforce, for instance, choosing new recruits from their own background, though this has not proven to be the case as feared, argue many organisations.
A final potential problem with using employees as a source of new staff is the hit and miss nature of the method. There is no guarantee that the right candidates will be suggested at the appropriate time. And for this reason, the role of the professional recruiter is still a valid one.
